Pending sales of previously owned homes tumble

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Pending sales of previously owned homes dropped unexpectedly in September, according to the National Association of Realtors.

The NAR’s Pending Home Sales Index fell 2.3% last month – the biggest drop since the end of 2013. September’s decline follows a 1.4% tumble in August, and exceeds even the most pessimistic forecasts of economists, according to Bloomberg survey. The survey predicted anywhere from a 2.5% increase in pending home sales to a 1% decrease, according to Bloomberg.

The decline may have been fueled by tight inventory and stricter credit standards, according to the NAR.

“There continues to be a dearth of available listings in the lower end of the market for first-time buyers," NAR chief economist Lawrence Yun said in a statement. “Additionally, the rockiness in the financial markets at the end of the summer and signs of a slowing U.S. economy may be causing some prospective buyers to take a wait-and-see approach.”

Still, Yun said, he believes the housing market will continue to do well in the coming months.

“With interest rates hovering around 4%, rents rising at a near eight-year high, and job growth holding strong -- albeit at a more modest pace than earlier this year -- the overall demand for buying should stay at a healthy level despite some weakness in the overall economy,” he said.

The total Pending Home Sales Index was 106.8 on a seasonally adjusted basis, the lowest reading since January. Pending sales fell in all four regions of the country, with the Northeast seeing the largest drop, 4%. Purchase contracts declined by 2.6% in the South, 2.5% in the Midwest, and 0.2% in the West.